A guide on Double Taxation Avoidance (DTAA) and Tax residency certificate in UAE

Businesses of today are not restricted to a single location, they are spread across the world and carry out activities on a global platform. There has been a boom in cross-culture business activities off late, which results in diverse benefits and enhances the trade relations between nations. The negative side of cross-country business activity is that these companies get taxed in different jurisdictions. To resolve this and help businesses from losing their money, countries entered into Double Tax Avoidance Agreement.

Public and private companies, investment firms, air transport firms and various other firms functioning in the UAE and residents of the country, can benefit from Avoidance of Double Taxation Agreements. All onshore and free zone companies can claim tax domicile/tax residence certificate in UAE, but offshore companies cannot. When two nations sign the agreement, the residents and investors of these countries can avail the benefits of the agreement via a tax residency certificate.

UAE has entered into double taxation avoidance agreement with numerous countries; it has agreement with 90 nations and 33 are pending in the list. Out of the 90 countries in force, 42 are from Europe, 23 from Asia, 13 from Africa, four from Middle East, two from South America, two from Central America, two from Oceania, and one each from North America and the Caribbean.

Promotes the expansion goals of the country and helps in economic diversification

Aids in the eradication of double taxation, additional taxes and indirect taxes and fiscal evasion

Promises hassle-free cross-border trade process

Takes into consideration any issues related to taxation and the global changes in the economic and financial sectors

Encourages the exchange of goods, services and capital movements

It’s not just companies that can apply for Tax residence certificate in UAE, even individuals who have been residents of the country for more than 180 days and who can provide the required documents, can apply for the certificate. One need to have copies of passport, residence, tenancy contract, bank statement of at least 6 months, salary certificate and immigration report of residency, to avail the certificate.

The UAE is planning to expand the list so that more countries get to enjoy the benefits of the agreement and get motivated to flourish their business.

Form 10F stands for an undertaking by the expatriate company/individuals about their PAN declaration and other contact information. Based on this form , the UAE Entity issue another undertaking in the specified format to expatriate party for fund transfer purpose with nil WHT